Fonterra probe delay frustrates farmers
Watchdog inquiry report to be too late for annual meeting
Fonterra shareholders hoping to have something to vote on at this year’s annual meeting after an internal review of their controversial $50 million farmer council are likely to be disappointed.
After advising shareholders the review’s final report and recommendations will now be closer to late November than August, the review group’s chairman has told the Herald if significant proposals to change the council emerge and need voting on, it is unlikely they will be in time for this year’s Fonterra annual meeting — normally in November.
While the delay is being attributed to Covid-19, November will mark one year since the council narrowly fended off shareholder remit attempts to have its performance professionally measured by undertaking to launch its own review.
The delay has disappointed and frustrated shareholders who want the council scrapped, while others are philosophical, saying they would rather the process of deciding the best form of farmer-shareholder representation in New Zealand’s biggest company wasn’t rushed.
Either way, it now looks certain Fonterra’s farmer-owners will at this year’s AGM be asked to stump up another few million dollars to keep the 25 farmer-member council in business next year.
The council’s budget this year was $3.2m. In the 20 years since it was formed, it has cost farmers around $50m to operate.
Intended as a watchdog for farmer interests, gripes that it is more a lapdog for the Fonterra board have grown in recent years, inflamed by the big co-operative’s $605m net loss last year and advice last year from the council that shareholders had experienced $4 billion of wealth destruction in two years.
Critics say it is redundant in today’s business world and note Fonterra employs field reps to liaise with shareholders so there is duplication of work.
Review group independent chair
It became impossible to do something that did justice to the expectations of farmers around this review.
James Buwalda, Review group independent chairman
man James Buwalda said a recent survey of shareholders and sharemilkers had confirmed the importance of meeting farmers for face-toface discussions. Covid-19 had seriously impacted the group’s ability to organise such consultation around the country before calving. The survey findings would be available to Fonterra’s 10,000 shareholders by mid-this month and meetings with farmers were planned from midSeptember to mid-October, he said.
One shareholder, who declined to be named, suggested the message in the survey results from 1400 respondents had “shocked” the council.
“This is a defer, stall and forget strategy.”
Buwalda said the call to delay was the review group’s.
“As independent chair of that, I can absolutely assure that it was not influenced one way or the other by the council.”
Waikato shareholder Jim Cotman, one of a group of shareholders who, at last year’s AGM, proposed the council’s performance be professionally evaluated, said the review group could have met farmers in small groups by now, or used technology like Zoom.
“Heaven help Fonterra if this the best we can do. It’s shoddy really to go past a year and not come to the AGM with some report. They shouldn’t hide behind Covid-19.”
Cotman said the report needed to be “done and dusted” by the AGM so shareholders could get on and make change, just as Fonterra itself was changing its business strategy.
But Buwalda said the group, which comprises four farmers, two Fonterra directors and two councillors, had struggled with logistics under Covid19 restrictions.
“It became impossible to do something that did justice to the expectations of farmers around this review. It was a reluctant decision but in our judgment, the best decision in order to uphold the integrity of the process and ensure farmers can have a proper say in the process.”
Buwalda said it was “unlikely” any significant recommendations requiring constitutional change and a shareholder vote would be available in time for the annual meeting.
Waikato shareholder Trevor Simpson, among those who put remits to last year’s AGM, said he would await the survey results with interest but he wanted the council scrapped. He and supporters would put another remit to this year’s AGM if necessary, he said.
Cambridge shareholder Garry Reymer said he wanted change but “I’d hate to push on without the faceto face discussions”.
“I’d rather see it done properly. The council is important in my view as our board gets more and more removed from the shareholder base.
“We need to keep the power and control and the council is going to be more and more important.”
Shareholders could call a special meeting if necessary on the review recommendations, Reymer said.